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Figure 1. The annual growth rate of the treat segment in North America, Europe and Japan from 2002-2006 shows that Japan has a strong treat market, while Europe is slowly stabilizing and North America is doing well, but not experiencing explosive growth. Source: Euromonitor, 2006.

Top treat trends

Trends in pet treats at Petfood Focus 2007

Hot keeps getting hotter. With the global treat market worth
an estimated US$4 billion, Petfood Industry chose treats as the
subject of its most recent Petfood Focus event, held April
18-19, 2007, following Petfood Forum 2007 in Chicago, Illinois,
USA. Over 275 attendees were present. Three of the topics from
this event are summarized here.

Treat market overview

Bruce McKay, a petfood industry consultant, presented an
overview of global treat trends using data from Euromonitor
International. On a volume basis, the petfood market has
averaged modest growth of 2.5% annually over the past five
years, while the treat segment has shown slightly higher
growth.

He noted that two areas of the world dominate: North America
represents 52% of the global treat market, while Western Europe
accounts for 30%. In value terms, all major regions of the
world are showing solid growth, particularly Eastern Europe and
Latin America.

McKay stated that as you look at global opportunity you need
to look at the market differently. He believes there should not
be a one-size-fits-all strategy for this marketplace and that
there are very different opportunities regionally.

"I think there are new volume opportunities in some of the
emerging markets of Latin America, Asia and Eastern Europe in
particular. I think that they will exist for some time to
come," stated McKay.

Germany, England and Japan have all had a lead on North
America in terms of sophistication of the packaging and of some
of the products, according to McKay. The consumer is showing a
strong willingness to pay. McKay thinks this is something
American companies should consider. "I think they can increase
the sophistication of their products, increase the price points
and capture a lot more value," he said.

McKay took a six-year look at the treat business, and he
found that the dominating markets of North America and Japan
were showing the best growth (see Figure 1). He also found that
treats range in price from US$1.00/lb. to US$30/lb. "The truth
is that some consumers are buying those products at US$30/lb.
This is a very exciting opportunity. And it's only going to get
more dramatic as functional ingredients are promoted more
aggressively. The beauty of treats is that you should have a
singular focus in the functional benefit, so there's an
opportunity to have a much more complete line and to capture
this idea of added value," said McKay.

Next, McKay compared the human market to the pet treats
market. "The important thing here is the consumer has to
understand the function of the product for themselves before
they would contemplate giving it to their pets. As you evaluate
your opportunities, make sure you've looked at it from both
sides with a human mind-set before jumping into the pet side of
things. We can't get too far ahead of ourselves," he said.

McKay demonstrated that two-thirds of people answering a
survey weren't quite sure what particular functional products
did. There was uncertainty about probiotics, glucosamine and
omega-3s. "If a consumer sees four or five different messages
on a petfood package, frankly they get confused. At times we do
ourselves a disservice trying to give away too much, or
assuming the consumer understands more than we think they do.
There is an opportunity to get more of a singular focus on
treats. This will capture more of the value that I think is out
there," said McKay.

Functional ingredients

Dr. Robert Taylor, chief of staff for Alameda East Animal
Hospital and one of the stars of Discovery Channel's E-Vets
Interns TV show, gave his veterinary perspective on how
functional ingredients in treats could be best used for
companion animal health. He began by emphasizing that his
over-riding principle is to be overly cautious about the types
of treats he recommends because, ultimately, the veterinarian
bears the burden of responsibility for everything he/she
recommends.

From there, Taylor went on to describe his "ideal treat." He
said that he would like to have numerous sizes of a particular
product available, because dogs come in variations from two
pounds to 250 pounds. Secondly, he requested proven
digestibility. "We are seeing great strides in digestibility
studies. I commend you [the industry] for doing that. But, as
it stands now, many of the treats out there now possess or pose
some risk, so we have more work to do in furthering those
digestibility studies," Taylor said. His ideal treat would have
very little risk for obstruction, and obviously no risk of
toxicity/poisoning.

He noted that veterinarians in general have major issues
with pilling animals (administering oral medications). He often
sees very poor compliance on the part of the owner to give a
particular product. Thus, he requested a better solution for an
oral drug delivery system, whether it's a supplement or a
medicated edible chew product. In an ideal situation, he would
like to see an oral delivery form for a variety of different
things. Medications, vaccines, vitamins, probiotics, etc.,
would really make his job much easier and would really benefit
animals worldwide, according to Taylor.

One of the things that intrigued Taylor about the petfood
industry is that manufacturers can change the taste and the
smell of various products. He said it would be very useful to
have a functional product with a new taste/smell profile for
every day (up to 30 days of treatment), so the animal wouldn't
tire of the flavor.

So, what does the future hold? As Taylor sees it, edible
vaccines could be used to eradicate animal diseases around the
world. Another trend that he has found very intriguing is the
emergence of obesity in our animals. He thinks the petfood
industry could utilize some of the information that is
currently developing with new novel nutritional treats/products
involving enzymes, probiotics and some form of oil product,
like palm oil, in an effort to create early satiety.

Treats for dental health

Dr. Jennifer Larsen, consultant for Davis Veterinary Medical
Consulting PC and assistant clinical professor at the
University of California at Davis, shared her perspective on
dental treats. She told the audience that a survey of
veterinary practitioners from 52 private clinics found that
dental disease was the most commonly reported disorder in that
population. Of over 31,000 dogs in that population, over 20% of
dogs of all ages had calculus and 20% gingivitis. Of 15,000
cats of all ages, 24% had calculus while 13% had
gingivitis.

According to Larsen, using foods that are formulated for
dental disease as treats in small amounts in addition to the
animal's regular diet is commonly seen in practice. The
interest in functional foods is likely to drive dental treat
growth, according to Larsen.

Larsen said there are two different strategies used in
dental foods and treat products, mechanical and chemical. The
mechanical effects are scrubbing and structural. The size and
shape of the kibble or the treat influences chewing time, which
in turn influences tooth contact time and gingival stimulation.
Another aspect of the mechanical strategy is the abrasive
effect.

On the chemical side, there are a couple different ways to
deal with dental disease. Some chemicals are aimed at the
bacterial population (antimicrobials) and are designed to
inhibit calculus formulation. Some of the common antimicrobials
in both foods and treats include enzymes. Enzymes include
lactoperoxidases and such things naturally occurring in saliva,
and they have been added in even higher amounts in treats and
some foods. Chlorhexidine is an antiseptic that is incorporated
in some treats and added to some rawhide type dental
treats.

Zinc salts are also showing some promise in this area,
according to Larsen. Currently, they are used mainly in
toothpastes and gel products that are applied to the tooth
surface. They have antimicrobial affects and some inhibitory
affects on calculus formation as well.

Another newer antimicrobial strategy is the use of grape and
green tea polyphenols. They have been used mainly in the food
area, and Larsen has not seen them incorporated into treat
products yet. She believes that this is an area that will
become more common.

Calcium chelators are another chemical means of inhibiting
calculus formation. They work via taking away the calcium
present in saliva and binding it up so it's not available to
mineralize into a calculus on the teeth. Chemical chelators
include sodium tripolyphosphate and sodium hexametaphosphate
(HMP). They have been proven to be a pretty effective means of
dental disease prevention, noted Larsen, especially when used
as a coating on kibble. They have not been shown to be
effective when combined into the kibble itself, however.

Larsen stressed that it's important to prove efficacy when
you have a functional product such as a dental treat. Not only
to meet regulatory approval, but because a lot of
recommendations will be coming from the professional
(veterinary) sector. Veterinarians want to see proof of
efficacy because their reputation depends on that. The consumer
is also becoming more discerning as far as demanding proof of
efficacy.

"There's an expanding market for dental treats, I think,
that's really exciting, there's a lot of opportunity for growth
and some really great innovative products. I really encourage
you to establish efficacy with your clinical trials and apply
for Veterinary Oral Health Council approval," she
concluded.

The experts' key points

Consumers are showing a strong willingness to pay for
sophisticated packaging and products.

Marketers need to help consumers understand the function
of a treat before they will consider giving it to their
pets.

For a veterinarian, the ideal treat would come in
various sizes, have proven digestibility, very little risk
for obstruction, no risk of toxicity and offer a new
taste/smell every day.

Treats could serve as an oral delivery system for
medications, vaccines, vitamins, etc.

The interest in functional foods is likely to drive
dental treat growth.